Syria: Reconstruction in Syria: All eyes on the prize

8th Jun 2013

European actors are once again touting the importance of Lebanon’s stability out of a belief that the country will be a crucial base for their future Syrian reconstruction projects.

There have been multiple scenarios for post-war Syria, but on Wednesday, it appeared as if there was an end in sight to the two-year civil war. The Syrian army’s recapture of Qusayr, a military “victory” of sorts for the regime, coincided with open discussions in Beirut about reconstruction.

The Basil Fuleihan Institute of Finances (IoF) held a seminar over the first week of June titled “Prospects and Opportunities for Postwar Growth in Lebanon and Syria” as part of the 2013 Forum for Advanced Studies for Economic Development in the Mediterranean (CHEDE-MED).

The ambassadors of France, Italy, and Spain attended the event, representing three major European nations that have considerable international influence. If anything, this reveals that there is clear European enthusiasm for a new phase in Syria that may be just on the horizon.

Patrice Paoli, the French ambassador to Lebanon, said that while Lebanon may be currently suffering from the Syrian crisis, it will have a role in the reconstruction of Syria. The French diplomat stressed the need for various stakeholders to prepare for that phase “as part of a comprehensive regional vision.”

On the French side, the issue is not just Lebanon’s central role after the end of the conflict, but also about how the French economy can benefit from the Syrian devastation. Paoli said that French companies “will continue to be strongly present in Lebanon, preparing for the next phase out of their belief in future opportunities.”

However, one condition for such activities, Paoli said, is stability in Lebanon. Another condition is for institutions in Lebanon to operate in an orderly way, so that “the international community can work together with them to help Lebanon contain the effects of the crisis.”

Today, many regional and international experts are anticipating the expenses and profits of a post-war phase. According to figures presented by Salma Sabra of the Lebanese-French Bank in Syria, the cost of reconstruction will be range from $65 to 100 billion, if the conflict ends in 2015.

Abdullah Dardari, former deputy prime minister for economic affairs in Syria, estimated that after two years, damage to the Syrian economy would total $60 billion.

A banker who attended the seminar observed, “No doubt, the European countries are very keen to find business for their construction companies, given the recession in Europe.” However, the banker added, “I believe we are still far from seeing a convincing stability take hold in Syria.”

All of Europe’s economic indicators for 2013 are in the red. For instance, according to the latest International Monetary Fund forecast, the Eurozone economy – which includes 17 economies in Europe – will shrink by 0.3 percent in 2013, while growth for 2014 has been slashed to 1.1 percent in the best-case scenario.

In response to a question about his country’s vision for the post-war Syria, the French ambassador said, “Of course we are preparing for the reconstruction phase, but I personally do not have any plans in my pocket!”

For her part, Spanish Ambassador to Lebanon Milagros Hernando said that it was important for other countries to benefit from “Lebanon’s expertise in the post-conflict stage, and from how Lebanon has managed to cope with the effects of the conflict in Syria in the past two years.”

Yet the Syrian “prize” is not only tempting to European companies, but Lebanese ones as well. Banks, perhaps, are the first to detect opportunities. According to experts who presented their assessments during the IoF event, Lebanese banks continue to be active in Syria, albeit at a lower level, because the price of leaving that market and then returning after stability is restored, would be much greater than enduring the crisis and suffering temporary losses.

Yet the Syrian “prize” is not only tempting to European companies, but Lebanese ones as well.

Apart from holding out for a big role for Lebanon in the future and showing interest in its stability, the Europeans have raised another important matter: Lebanon must put its own house in order in the current transitional period, especially in terms of infrastructure and investment procedures.

According to Lebanese Minister of Finance Mohammad Safadi, who attended the IoF seminar, “The reasons for the lack of a firm decision to reform the electricity sector, for example, in the past two decades remain so far unclear.” Indeed, there is no logical justification for why Lebanon remains, 20 years after the end of its civil war, without reliable electricity.

Without a doubt, all this is the result of Lebanon’s skewed politics, the absence of good governance, and corruption, issues that the finance minister failed to mention.

One of the major burdens on Lebanon’s resources and capacities is the influx of Syrian refugees. “According to official figures, drawn from the number of people registered with international organizations to obtain aid, the refugees total around 500,000,” Safadi said, before he added, “But in reality, the actual number of Syrians in Lebanon is nearly 1.5 million.”

At any rate, stability remains the key word for any Lebanese role in the next phase. “It is in the interest of Lebanon for Syria to be a stable and prosperous country, and the opposite is true. The war in Syria will eventually come to an end, and it is therefore prudent to begin preparations for…reconstruction.”

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